Texas has launched the first state-run cryptocurrency reserve, with a $5 million bitcoin purchase. The move is the latest in the state’s embrace of the crypto mining industry, and other states may have their own crypto reserves soon.

Texas welcomed crypto mining after China banned it in 2021. And by one count, at least 60 power-hungry crypto mines — essentially computer clusters running 24/7 — are now operating in the state. 

“Texas has had a tremendously open grid situation with plenty of electricity,” said Ed Hirs, an energy fellow at the University of Houston’s economics department.

And while a $5 million bitcoin reserve is not much, Lee Bratcher, president of the crypto industry trade group Texas Blockchain Council, said it matters for the companies that now call the state home. 

“It does send a powerful signal that Texas is going to be and continues to be a pro-business state that’s open to innovation,” he said. “Texas is making play where future of finance and capital formation happen.”

But Hilary Allen, a law professor at American University, said the signal Texas is really sending is that there are governments willing to back cryptocurrencies, which can have wildly fluctuating prices. 

“I think this is something that the crypto industry wants, because they want to have this baseline demand … to sort of keep the floor from falling out completely under these crypto assets,” she said.

Some Texas lawmakers say a crypto reserve can be a good investment because the state can sell assets later for a profit. 

And other state governments may soon follow suit. Arizona and New Hampshire have enacted laws to create similar crypto funds.